Fallout from the global pandemic continues to throw light on the responsibilities of directors in times of financial distress. This briefing examines those duties in greater detail, particularly in relation to Guernsey’s company law.
Decisions, decisions
Directors owe duties to the companies they serve and ordinarily discharge those duties with reference to the interests of the companies’ members as a whole.
The Federal Government has recently announced that from 1 July 2021 the statutory minimum amount to serve a creditor’s statutory demand will increase from $2,000 to $4,000. The 21 day period within which a debtor must respond to a statutory demand and the personal liability on Directors for insolvent trading will remain the same.
In Sun Electric Power Pte Ltd v RCMA Pte Ltd (formerly known as Tong Teik Pte Ltd) [2021] SGCA 60 (“Sun Electric”), the Singapore Court of Appeal (per Justice Judith Prakash) addressed in its written ground of decision (“GD”) the questions of: (i) what is the applicable test for the purpose of determining insolvency under s 254(2)(c) of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”); and (ii) who should be the appropriate party to control the conduct of the appeal, as well as to bear the responsibility of any costs incurred during and after the appeal, following a company’s right
Highlights:
Important developments in insolvency law from Sun Electric Power Pte Limited v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) [2021] SGCA 60
Recently, in Sun Electric Power Pte Limited v RCMA Asia Pte Ltd (formerlyknown as Tong Teik Pte Ltd) [2021] SGCA 60, the Singapore Court of Appeal made several important clarifications about the law of insolvency in Singapore. In particular, the Court of Appeal clarified that:
On June 10, the Federal Trade Commission (FTC) filed an amended complaint for civil money penalties and other relief under Section 5 of the FTC Act prohibiting “unfair or deceptive acts or practices” and Section 521 of the Gramm-Leach-Bliley Act (GLBA) prohibiting the use of fraudulent statements to obtain consumer information.
On June 17, 2021, President Biden signed Senate Bill 475 into law, making “Juneteenth” a federal holiday. Because June 19th (tomorrow) falls on a Saturday this year, the day will be observed by federal government offices on June 18, 2021 (today).
This new law, revising the list of federal holidays in the U.S. Code, will affect consumer credit lenders’ operations. It is important for lenders to review their processes to determine how this new holiday will impact their operations.
The Government has announced further measures to help commercial tenants who are in arrears as a result of the Covid-19 pandemic, seemingly without much regard for the difficulties also suffered by landlords. Below we explain the latest measures and where this leaves landlords.
The headlines are:
In order to proceed against a debtor's personal property in Guernsey, customary law remedies are used which start with the arrest of a debtor's goods but which allow all creditors to share in the proceeds in the event that the monies owed are greater than the debtor's assets.
Arrêts
Once judgment is obtained against a debtor, the 'arresting creditor', will either:
The suspension of wrongful trading under the Corporate Governance and Insolvency Act 2020 was introduced to allow directors to trade during the pandemic without the unwanted distraction of potential liability. This article considers whether that objective is likely to be achieved in circumstances where there has been no modification to the common law rules governing duties owed to creditors, and in light of the Court’s power to award compensation in disqualification proceedings.
Introduction